[Congressional Record Volume 143, Number 96 (Wednesday, July 9, 1997)]
[House]
[Page H5007]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              TAX RELIEF FOR MIDDLE CLASS WORKING FAMILIES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Minnesota [Mr. Gutknecht] is recognized for 5 minutes.
  Mr. GUTKNECHT. Mr. Speaker, I want to talk a little bit tonight about 
tax relief, and particularly tax relief for middle class working 
families. All of us were home for about 10 days in our districts and 
most of us had a chance to meet with folks in community events. I was 
at Spam Jam in Austin, Minnesota, where we celebrate the world's 
greatest lunch meat. I was at 6 parades in my district. I got a chance 
to talk to a lot of people. What they told me was pretty simple. I 
think they are generally pleased with what we are doing in terms of 
balancing the budget, but frankly they do want some tax relief, they 
want it to be fair, they want it to be part of a balanced budget plan, 
they would like us to save Medicare.
  I am happy to report tonight, Mr. Speaker, that we are doing exactly 
that. I want to talk a little bit about the differences in the debate 
that the American people are being subjected to about whether or not 
this tax relief plan that we are offering to the American people is 
fair.

                              {time}  2215

  And I would suggest that there is a big difference in the debate, and 
the debate is between real and potential, real and potential. In fact, 
if you listen carefully to the debate, we are going to talk about real 
tax relief, they are going to talk about potential tax relief. They are 
going to talk about potential income, we are going to talk about real 
income.
  And I do not fault completely our current Secretary of the Treasury, 
Mr. Rubin. He was not the first to come up with a concept of imputed 
income.
  Now what is imputed income? And earlier we had one of our colleagues 
from Texas talk about a family that made $40,000. Now someone, if we 
had been able to, and sometimes it is rude to interrupt people and ask 
them to yield, but is that real income or is that imputed income? 
Because imputed income, as the gentleman from New Jersey [Mr. Saxton] 
said earlier, includes potential rent that you could get from the house 
that you currently live in.
  As a matter of fact, David Brinkley a couple of years ago opined 
about this issue. Imputed income is income that you might have had but 
did not. It is potential income.
  For example, the example has been used several times about the young 
fire-fighter or the young policeman who earns $25,000 or $35,000 a 
year. Well, if he lives in his own home and could have rented his home 
out, actually then his real income might have been $40,000 or $45,000. 
If he has a vested interest in a pension plan, that would be part of 
his imputed income.
  So if we are going to calculate people's income using imputed income, 
let us calculate the taxes.
  But the real fact of the matter is that if you look at this chart 
that earlier was presented, nothing really changes with the tax bill in 
terms of who is going to pay the taxes. What this chart shows is that 
under the current tax formula the top 20 percent of taxpayers pay 63 
percent of all the taxes paid in the United States. Under the new tax 
formula that we are proposing from the House, the top 20 percent will 
still pay 63 percent.
  Now we are going to have this debate, and they are going to use 
imputed income, we are going to use real income. They are going to use 
potential taxes, we are going to use real taxes.
  We should not even have this argument, and we are not going to ask 
the American people just to trust us and do not trust them. Trust 
yourself. And what I am going to invite people to do is to calculate 
the tax cut for themselves, and this is available now, I think, on the 
World Wide Web. We are going to make these worksheets available so 
people can calculate their own tax relief.
  This is a very simple little work sheet: Number of children in your 
family under the age of 17; under our tax relief, the first year, 1998, 
you multiply times 400, and the second year and years after, you 
multiply it times 500. If you have two children it is worth $800 next 
year and $1,000 the year after. If you have a capital gain, if you earn 
more than $41,200, you multiply times 8 percent. If you have income, 
household income, of less than $41,200, you multiply times 5 percent. 
That is what you are going to save. And finally, if you have youngsters 
who are in their first 2 years of college, you multiply times a $1,500 
credit.
  Do the calculations yourself, but I can tell you this: If you are an 
average family in my district earning $32,500 a year with 2\1/2\ 
children, in fact let us just say 2 children, it is worth over $1,000 
to that family.
  Now that is real money that they can spend themselves or they can 
save for their own future.
  So do not take our word for it, do the calculations yourself, and 
these are real tax cuts for real people, not potential tax cuts for 
potential income.
  Finally let me just say there are additional benefits in this tax 
relief package, and you have choices as to whether you want to take the 
credit on higher education costs or you can take a $10,000 deduction 
depending on your situation. Penalty-free withdrawals from your IRA's 
for college expenses, exclusion of capital gains on a home up to 
$500,000; this is real tax relief for real families, not potential tax 
relief based on potential income.

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